Health Insurance Market Domination Persists: Key Insights



The American Medical Association (AMA) has reported that limited competition in the insurance market may be harmful to consumers and providers. The report found that the 10 largest commercial health insurers by market share in the U.S. were UnitedHealth Group (14%), Elevance Health (12%), CVS (Aetna) (11%), Cigna (10%), Kaiser Permanente (7%), Health Care Service Corp. (6%), and various branches of Blue Cross Blue Shield (2% each). The report also pointed out that for Affordable Care Act markets, 90% of metropolitan statistical areas (MSAs) were highly concentrated in 2022, down from 95% in 2014, and indicated that high levels of market concentration are usually due to consolidation of insurers through mergers and acquisitions, which can lead to higher premiums and decreased consumer benefits.

Insurance Market Concentration: A Concern for Consumer Welfare

A recent American Medical Association (AMA) report delves into the growing concentration of insurance markets. Findings suggest that limited competition among insurers could potentially harm consumers and providers.

The report highlights the largest share insurers in commercial health insurance, Medicare Advantage plans, and Affordable Care Act (ACA) public health exchange markets. According to AMA President Jesse M. Ehrenfeld, high market concentration could lead to increased insurance premiums, affecting patients’ financial burden.

Leading Insurance Providers by Market Size and Type

The AMA report identifies the top ten commercial health insurers at a national level. UnitedHealth Group emerges as the largest commercial health insurer in terms of Medicare Advantage market share. The report also discovered that 90% of MSA-level markets were highly concentrated in 2022, a drop from 95% in 2014. In 67% of MSAs, one insurer held a market share of at least 50%.

High Population Areas Exhibit High Market Concentration

The study examined 381 metropolitan statistical areas (MSAs), revealing that 73% of MSA commercial markets were highly concentrated as per national standards. A single insurer held at least 50% of the market share in 48% of these markets. This rising trend of market concentration is linked to insurer consolidation through mergers and acquisitions, leading to health insurer monopoly power.

Consolidation: A Recurring Issue in Healthcare

Market consolidation issues persist in the healthcare sector, often sparking warnings regarding the lack of competition between providers, such as health systems and hospital groups. The federal government is now focusing on this issue, with recent moves by the Biden Administration to subject market consolidation to stricter regulatory scrutiny.

The Federal Trade Commission, Department of Justice, and Department of Health and Human Services are employing regulatory and legal actions to promote competition and lower healthcare costs.

Health Insurers Respond

The industry group America’s Health Insurance Plans (AHIP) counters the report by asserting that competition among insurers has led to reductions in premium costs in some markets. AHIP’s senior vice president of communications, Kristine Grow, commented to MedCity News that the industry is committed to lowering prices for consumers.

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